Kitchenware and Gifts

Market Characteristics

The kitchenware and gift shop industry can be segmented according to the type of products sold at the store and their quality.The market categorized as follows:

Simple stores

Mid-level stores.

Prestigious stores

Good quality kitchenware stores

Kitchenware departments at retail food chains

Kitchenware departments in Do-It-Yourself chains.

 

Seasonality:

The kitchenware industry is highly affected by seasonality. Most activity occurs during two high seasons: around Passover and the Jewish New Year. The rest of the year is characterized by relatively mellow sales. According to sales data analysis conducted among many active bodies in the industry, it is estimated that in March and April, before Passover, sales reach 50% of total yearly industry sales. During second high season, right before the Jewish New Year (August and September), 30% of sales are conducted. The remainders 20% of sales are spread throughout the rest of the year.

 

Competition:

This industry is completely derelict- entrance threshold is very low, professionalism level is not necessarily required, and because of changes in the import and custom policies in the 1990's, import has become easier. Therefore, there is a wide variety of various quality, price, and design products.

 

Vendors

Active vendors in the industry are importers and local manufacturers.

Merchandise is internationally imported, and consists of various qualities, materials, and prices.     

Typical payment terms are EOM+30-EOM+60.

Local manufacture focuses mainly in plastics, ceramics (both kitchenware and gifts), and Jewish products.

Typical credit terms are eom+30.

 

Customers:

Product purchases at retail chains and department stores usually occur in conjunction with various food and cleaning products. Kitchenware in this case constitutes peripheral products, and products most often purchased are basic kitchenware, Tupperware, simple gadgets, etc.

Kitchenware and gift purchases at specialty stores, however, are usually planned. Customers usually go to these stores with the intent of purchasing these products.

 

 

 

 

 

 

 

Marketing Resources

Typical marketing in the industry is based on the following:

  • Professionalism and service,
  • Correct identification of customer needs,
  • Local press advertisement.
  • Signs and store window design,
  • Promotions,
  • Discounts for regular customers.

 

Factors Affecting Success:

  • Reputation and period of service: established stores usually have a regular clientele. Although some of these stores are not located in central locations, they benefit from existing reputation and sales are not hindered.
  • Design and organization of the business in an interesting and attractive fashion.
  • Location is a primary factor affecting the store’s success.
  • Locating the store in shopping malls increases the number of customers and sales respectively.
  • A wide array of products at various prices.

 

Future Development Options

The increase in some chains is highly affected by the gap bridging between price and product quality sold at chains and department stores, and customer demand for a full line of products that will allow a concentrated purchase of various types of products all in one store.

Internet sales, especially gift sales, are increasing at a relatively moderate rate.

 

Entry Barriers:

High investment in inventory- a kitchenware and gift shop usually carries a wide variety of products. A medium sized store carries approximately 70,000-120,000 NIS of inventory.

Seasonality- because sales are not constant throughout the year, neither is profitability. The kitchenware industry is highly affected by seasonality. Most activity is concentrated to two high seasons: around Passover and the Jewish New Year.

Storage and display area requirements.

 

Financing:

Industry Revenue and Profitability

 

Yearly revenue per worker (in NIS thousands)

 

Type of store

2003

2002

Simple

242-363

245-367

Regular

423-544

428-550

Prestigious

665-786

673-795

Quality kitchenware

786-907

765-917

 

 

 

 

 

 

 

 

 

 

Factors affecting revenue

  • Revenue of a well-established, reputable store will usually tend to the higher range of revenue respective to the type of store.
  • Revenue of prestigious stores not located in central Israel will usually tend to the lower range.
  •  Revenue of prestigious stores located in areas more prestigious areas may be higher than mentioned above.
  •  The business’ operating hours affect revenue:
  •  Revenue of stores that are always open will be 20-25% higher than mentioned above.
  • Revenue of stores that are open on saturday evening will be 5% higher than mentioned above.

 

always

 

Profitability

Raw profit percentages

Profit percentage

Type of store

29%-35%

Regular

25%-33%

Regular

35%-41%

Prestigious

33%-40%

Quality kitchenware

RISK LEVEL:

According to data collected regarding activities of the main companies active in the industry, and deriving from information collected by other sources in the branch, it is estimated that the risk level of the industry is regular, and there are no excessive closures or bankruptcies.

 

LICENSES AND CERTIFICATIONS:

Only local authority licensing is required.

If the size of the store is over 500 square meters, police permit is also required.

 

Insurances:

Business insurance for content and inventory.

Third party insurance.

Employer’s liability insurance (if staff is employed)

Loss of income insurance.

In addition to the above, an insurance agent should be consulted in regards to the need for additional insurance.

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